Shares of Dollar General Corp. (DG) made new lows for the move down Thursday morning on the heels of a holiday quarter with disappointing results.
Let's check out the charts and technical indicators.
In the daily bar chart of DG, below, I can see that the shares gapped lower Thursday but are coming off their early lows. DG broke its January low. Prices were already trading below the declining 50-day moving average line and below the declining 200-day line.
Trading volume looks like it has been more active the past two months as prices have declined. The daily On-Balance-Volume (OBV) line has been weak since the end of October. The Moving Average Convergence Divergence (MACD) oscillator has been below the zero line for much of the past year.
In the weekly Japanese candlestick chart of DG, below, I see some long-term problems. Prices have traded higher from early 2019 but the trend is shifting from up to sideways as prices trade below the flat 40-week moving average line. A negatively sloped 40-week moving average line will be a big negative if it happens.
The weekly OBV line shows weakness from the middle of 2020. The MACD oscillator also shows weakness (lower highs) from the middle of 2020.
In this daily Point and Figure chart of DG, below, I can see the recent decline with no price gaps. A downside price target in the $188 area is being projected.
In this weekly Point and Figure chart of DG, below, I used a five-box reversal filter, which yields a price target in the $110 area.
Bottom-line strategy: I am not sure what investors in DG are looking at or anticipating the months ahead but the charts and indicators suggest a deeper decline for DG in the weeks and months ahead. Avoid the long side.
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